A Debt Management Plan (DMP) is one alternative to debt settlement.
- How it Works: Offered by credit counseling agencies, a DMP involves consolidating your debts into one monthly payment. The agency negotiates with creditors to reduce interest rates or waive fees.
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Pros:
- Single monthly payment.
- Potential for lower interest rates and waived fees.
- May not have a direct impact on your credit score (though accounts may be closed).
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Cons:
- Requires discipline and sticking to a multi-year plan (usually 3–5 years).
- Accounts may need to be closed, impacting credit utilization score temporarily.
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